Spurred by the global pandemic, a rise in social activism and the surge of wellness movements, consumer sentiment has shifted significantly over the past few years. Nearly all (93%) consumers surveyed in PwC’s most recent Holiday Outlook shared that trust is a top influencer in their buying decisions. Pre-pandemic, that number was 70%.
Consumers have upped their scrutiny of brands and the world at large, which means that brands must tell an effective environmental, social and governance (ESG) story in order to win and retain consumers in 2023.
The State of Trust
Consumers are won over by brands that have a clear purpose and well-defined ESG commitments. The resulting impact is exponential — when a company earns their trust, 90% of consumers say it also earns a recommendation to friends and family.
The question is: how can brands build and maintain the type of consumer trust that leads to both loyalty and greater reach?
First, brands need to define what trust means — and ensure internal strategies align with what consumers are seeking. PwC’s Trust in Business survey shows that consumers, employees and business leaders agree on foundational elements of trust: data protection and cybersecurity, treating employees well, ethical business practices and admitting mistakes.
In other words, brands must take accountability for their broader impact.
The same survey shows almost half of consumers have started or increased purchases from a company because they trust it, and 33% have paid a premium for trust. On the flip side, the consequences businesses face when they break consumers’ trust can be severe and immediate: 44% of consumers have stopped buying from a company due to a lack of trust.
Creating your ESG Programs
One of the best ways retailers can better align with consumers around trust is by putting their ESG initiatives at the forefront. Consumers have repeatedly impressed over the years that they want to know the ESG stories of the brands they support.
With your company’s purpose and values as the foundation, crafting an ESG story takes forward thinking and clarity about what’s at stake. It’s best if functions from across the brand align on questions including: What should be reported? And when?
Don’t overlook the total cost of ownership. Calculating ROI should include projected revenue and profit growth — from both an uptick of spending from existing customers and the addition of new customers.
A data strategy is central to the structure of ESG programs as well. Verifiable data from a brand’s own and supplier sources will help make procurement decisions in alignment with ESG goals. As with any data-driven project, be selective in what information you collect. Telling an ESG story is only effective when supported by credible, intentional data usage.
A framework that includes goals, tools and a blueprint for continuous improvement will help ensure the impact of your ESG programs can be measured. Be sure to put theory into practice. To help drive employee adoption, retail leaders need to provide the right skills, resources and data. Top management leadership and support for ESG enforcement are also essential.
Telling your ESG Story
Speaking of employees, provide ample opportunities to increase their knowledge of, and role in, ESG. This approach can also be applied to telling your ESG story to your stakeholders in ongoing conversations about your program, controls and systems, as well as engagement channels.
Our survey shows that more than 75% of consumers seek referrals from a variety of sources. For younger consumers (ages 17 to 40), social media is their go-to. All generations will look to your company website, friends and family, and traditional media for recommendations.
Your audience is listening carefully to the messages your brand is sending. Accurate, ongoing communications are vital to ESG success with consumers. Convey your messages consistently so that your stakeholders remain aware and aligned with your company’s sustainability efforts.
Kelly Pedersen is a Partner at PwC, based in San Francisco, and leads PwC’s US Retail practice. With over 20 years of retail experience in both industry roles as well as a consultant, Pedersen has advised retailers on a wide array of topics ranging from growth and profit strategies to large business transformations and technology and capability building. He focuses a lot of his time in the merchandising area, helping retailers organize and optimize for growth in an omnichannel environment through their product, pricing, promotion and inventory strategies. Prior to joining PwC, Pedersen was an executive at a large global apparel retail and also worked for a large grocery retailer.